Posted
by
CmdrTacoon Tuesday July 22, 2003 @09:47AM
from the are-we-there-yet dept.

prostoalex writes "Remember Flooz? Or Beenz? With a few notable successes (PayPal, and that's about it) online micropayment industry is saving its success stories for future generations. New York Times reports about two nascent micropayment systems, one coming out of Stanford, one out of MIT, that are supposed to help the content producers and Internet users to engage in less-than-a-dollar financial transactions without huge overhead costs, so typical of credit card payments. BitPass requires you to purchase a virtual debit card with a certain amount on it to pay for products and services, and PepperCoin consolidates numerous micropayments into one bill that is then split between the content providers that managed to sell their product to the Internet user." I still believe that single penny transactions will revolutionize the net.

The mere fact that the article reports on two different systems highlights an enormous problem in the world of micropayments: competition creates more problems that it solves! The beauty of a micropayment system is that one doesn't have to keep an account with a single provider, and oftentimes these providers are small enough so that an account would be senseless anyway; the issue created, however, is that consumers moving from one provider to the next are going to need a common ground for payment between them. Although this is what a micropayment service is supposed to be, a flourishing of different micropayment systems will mean consumers will have to stick to one and be limited in where they can spend, or go through the hassle (and probably expense) of creating accounts with many, partially defeating the original purpose. What do I see happening? 1. A single system gains the monopoly, and micropayments start to actually look worthwhile. OR 2. Consumers just continue to resort to big name information providers which they create accounts with, maintaining the status quo. If the e-coins system I was a member of earlier in theis decade is any indication, I see the latter as the much more likely of the two evils to occur...

Governments are supposed to be responcible for maintaining a robust and useful currency system. Supplying a robust currency system should be a slam dunk, no brainer extension of the current monetary system. Online, government secured currency is what is needed.

One of the reasons a 3 cent transaction is doable is that there is not a business making the transaction unworkable by adding a fee. The voter is once again uncouncious, failing to force government to live up to its obligations.

THANK YOU! It is obvious, and it's been a problem for a while now. Online transactions aren't the only problem. We have a plastic currency society now, paper money is all but obsolete (though IMHO there will always be a place for it). In order to function now, it is arguably necessary to have a credit or debit card, yet private companies control who can and can't have one, and on what terms. It's just the same as if one person could use a $20 bill free of charge because they're "good" at using money, but another person had to pay $1 out of every $20 to someone else because they're "bad" at using money, and then there's the person who simply isn't allowed to use money at all because he doesn't have much to start with and he's been very bad at using it correctly in the past!

Governments should absolutely be moving with the times and providing transaction-fee-free plastic money and online money. Currency should be as neutral and transparent as possible, in order to facilitate a smooth and efficient marketplace. We've always supported the overhead required to create and manage the paper money, we should do the same for modern currency.

The overhead of paper money is FAR less than plastic. Money is made and released, and the governments obligation ends there.

With plastic the government has to become a bank (the money the card represents has to be managed by somebody). This implies that people have the ability to get money into the bank (direct deposite, tellers, etc..). That's big money right there.

Then there is the question of fraud.. with money there is no question. Posession almost entirely determines ownership of paper money. When someone robs you, it is a criminal matter. However, if you don't catch the crook you don't get the money back. With plastic fraud is much easier to get away with (you just need a number after all), and so government has to support THAT as well.

So the government is going to have to get into the banking business... which is not something I beleive it should stick it's nose in. Let it make the currency, leave it to the private sector to manage that currency.

One of the reasons a 3 cent transaction is doable is that there is not a business making the transaction unworkable by adding a fee. The voter is once again uncouncious, failing to force government to live up to its obligations.

Huh?

What on earth are you talking about?

It is not up to the government to provide an accounting system. The government (at least the US, European, and most Asian governments) does, indeed, provide a robust and useful currency system. Most even have currencies that are available i

You could make all the same false arguments about physical pennies, only perhaps moreso because they are made of metal and have to be minted.

The Web really could become a vital new part of the economy if we would simply set up a single system to manage some sort of e-cash suitable for micropayments. The govt. would simply "print" long random numbers each representing a penny, nickel, or dime. Then a centralized system would have to cancel each number when it was spent. The reason it can be done economi

The problem with the government doing online currency, at least in the US, is that by law any currency that comes from the Treasury Department MUST be accepted as legal tender in ALL transactions. So, for instance, if the government started issuing a credit card of its own, then it would be illegal for any business to NOT accept it as payment. "I don't have the equipment for a credit card transaction at this store" would not be a valid excuse. That would significantly raise the cost of entry into any mar

There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own pol

The even bigger obstacle to micropayments is the absurd notion that everything on the net is free. Paying even a nickel to listen to a song is an act of oppression. A band asking its fans to paypal a dollarto help cover the download costs for an album seems to create more indignation than dollars.

Unfortunately, the idea that everything must be free leads us to the less than desirable situation where only the politically connected or the idle rich will be in the position to provide high quality info on the

Monopolies are not the answer. This exact same argument was made in the OS market that there needed to be one monopoly that controlled the operating system, so that all the different software vendors would be able to have a common platform for their programs.

In general, competition creates an environment where products get better. The problem at this point is that there is not enough companies working on micropayment models.

The long delay in establishing micropayments was created in part by monopolistic

The break up of AT&T and the development of the internet seems to show that what we thought had to be a monopoly didn't have to be one.

The problem is that companies to date have approached the issue with monopolistic thinking. One company owns the transaction from consumer through to the site. The idea that one company owns the entire transaction creates the apparent need for a monopoly. To bust the monopoly, you need simply create a mechanism where different companies can own parts of the transaction

Why not? PaySite uses PayAlice. In order to give my two cents to PaySite, I have to give two cents to PayAlice. Fortunately, I have an account with PayBob -- and PayAlice has a merchant account with them. I simply use PayBob to give 2 cents to PayAlice, and PayAlice transparently passes it on to PaySite. This is an awfully large favor on the part of PayAlice -- but it's worth it, because through this alliance they've doubled the number of

Price-fixing? How is eBay responsible for price-fixing? It's the seller who determines their opening bids, not eBay. Can't hold eBay responsible for a seller's inflated vaule of their items for auction.

Amen. I sold my online Magic cards a couple months ago. I sold them all for $325 USD ($180 for one lot, $145 for another). Ebay took like $20 for the listings, Paypal took about $12 for the transactions (yes, even for a verified paypal buyer). All in all, Ebay and Paypal took about 10% of what I sold the cards for. Yes, their services provide a value, but 10% seems a little steep. I'm surprised Coinstar hasn't started an online presence. After seeing what it costs to sell stuff on Ebay, and to receive money

Getting to the single-penny transaction is a major milestone that's still a ways off into the future. I think the more likely model is one of those mentioned in the article, whereby the consumer purchases a set amount that is drawn down over time. The trick is to get that account to cover a wide enough variety of content so that people would be confident of getting value from it. There's no use in having to fund a Go.com account, a NYTimes.com account, and CNN.com account just to do your regular reading.

Call me an old curmudgeon but I think micropayments are just another new way to be (pardon the pun) nickel and dime'd to death. My bank already does it with service charges, my phone company does it with every little "feature", my cell company does it, et al ad nauseum.The only ones that will PROFIT!!! from this are the big companies pushing it on us.

I remember this same sort of thinking when HotWired introduced the first banner ad. And yet, without banner ads, Slashdot probably wouldn't even exist. The question in my mind is: What great sites don't exist now, that could exist by using micropayments?

The net as a culture dealt with advertising, and we'll deal with micropayments, too. The sites that try to nickel-and-dime you to death will die the same death as the sites that spam you with endless pop-up windows, blinking banner ads, or shoshkeles [unitedvirtualities.com]. The e

Call me an old curmudgeon but I think micropayments are just another new way to be (pardon the pun) nickel and dime'd to death. My bank already does it with service charges, my phone company does it with every little "feature", my cell company does it, et al ad nauseum.

I think you don't understand the concept of micropeyments... Making you pay 15 dollars for some service, even if you split the payment into 100 parts does not make it a "micropayment".

Yes, but their charges aren't actually nickels and dimes, but $5 and $10. Plus those charges are mostly bogus. They try to recoup just about every business expense directly from their customers, and give them funny names that sound like taxes.

I run a medium-sized content website. I get between 4 and 5 million pageviews per month, about 10,000 unique visitors per day, and about 180,000 unique visitors per month.

I've figured out that if I could get each unique visitor to pay me just a nickel -- 5 cents -- per month, I could take down the banner advertising, quit my day job, and work on my site full time (and therefore make it that much better with more information).

Think about it. What if you had to pay content sites just $0.05 per month to access the content? Most internet users visit perhaps at most 100-200 different content sites per month. That would add just $10 to your monthly bill, and all advertising could be eliminated.

I would think that sites that are successful in selling you things -- like Amazon -- wouldn't charge you to enter, so that may even cut down on the number of sites you have to pay for each month.

With a price point of just $0.05, you wouldn't have to think to yourself, "gee, should I click on this link, do I really want to spend the money"?

I've tried various forms of banner advertising, sponsorships, commission links, etc., but I still can't earn close to $0.05 (on average) from each visitor (I'm at about $0.003 per unique).

I don't want to make my site into subcription-based, I'd rather keep it free, or free enough so that people could still easily view it.

Face it, the content on the internet has slowed down a lot since the dot-bomb. That's a direct result of there being no money in content publishing. It's closing up even further; one by one sites are becoming subscription-only. Pretty soon the internet is going to be one big magazine rack with the magazines all shrink-wrapped, and just a few free-zines in the corner.

Simply giving web publishers a few table scraps each month would dramatically revitalize what was once a very promising source of content and entertainment. Micropayemnts are one of the few ways that this can happen.

I would think that sites that are successful in selling you things -- like Amazon -- wouldn't charge you to enter, so that may even cut down on the number of sites you have to pay for each month.

Aye, therein lies the rub. Once they discover that people are willing to pay micropayments for access, even the commercial players like Amazon won't be able to resist.

Soon, Amazon would be free for people who have purchased $n worth of stuff, and a micropayment for people just browsing. After all, if you're merely using the site as a reference, you should be happy to pay. Oh, and why should they foot the bill for you to comparison shop? Etc.

And prehaps it's redundant to state this, but the size of a micropayment is proportional to the number of sites requiring them. When every site costs $0.01 / visit, soon "premium" sites will cost $0.015, and so on. Eventually, we get the magazine situation you describe; the mechanism may be different, but the net result is the same.

I wonder when individual music artists will be able to take advantage of better systems like these for distributing their music rather than the major record labels-- at least those who really want to make any profit from anything other than their concerts and merchandise...

Whenever you surf to an advertising-sponsored site you are paying.I believe the problem with micropayments is the lack of a 'lender of last resort', namely a government backing the scheme. In countries where governments have shown an interest (Finland, Japan,...?) micropayments seem to work just like any other kind of virtual cash.Certainly there is no technical hurdle to overcome: compared with giving someone your credit card and saying 'I trust you to take what I owe you and no more', and sending them a 'cheque' by email (PayPal) or by SMS (a system I wanted to make), it's clear that a payments system does not have to be perfect to succeed, it just needs backing from banks and government.Presumably banks are wary of real micropayments because they make so much money from credit cards, the main alternative.Presumably governments are wary of real micropayments because they see their tax bases being nuked.I don't see either of these fundamentals changing soon.PayPal succeeded because they found a niche that was opening at the time, and were were very good, very lucky, to exploit it fully. But without credit cards in the background, PayPal would never have worked.

The problem with there being competing systems for MicroPayments is that consumers don't want to have multiple accounts (well at least I don't anyway).

Let's say Slashdot joins MicroPayment provider X, and New York Times Online joins MicroPayment provider Y, I need to have accounts with X and Y if those 2 websites happen to be in my favourites.

Interoperability needs to be sorted out right up front; otherwise no one company will be successful.

The obvious players are Visa and Mastercard. I suspect that they are just treading water until there is a whiff of possible competition, at which point they will swoop in together make MicroPayments happen between them.

Once a micropayment company becomes really successful, Paypal will buy them out, and integrate their services with Paypal's. This will make them the de facto standard on the Internet, and the other micropayment companies will die.

Shouldnt a micropayment system be just like the telephone system? You can have as many companies involved as you want. If they are competing for customers thats awesome, the key is to make micropaying between the different companies seemless, just like calling someone who uses sprint on my at&t phone is no different to me than calling an at&t customer. Unfortunatly it doesnt seem like this will come about without government intervention, and i wont be holding my breath for that.

It's not that Paypal is/was the only success, it's that they hooked everyone with free money and low fees. Since they had "other" (read as offshore gambling) sources of income and HUGE DeutcheBank investment + very lucky for the moment, stock market returns that allowed them to beat out competition. (eCount, PayMe, and there was another that skips my mind, that I used, that was really really good.)

Paypal also had a lot of marketting muscle and a catchy name.

To top this off, Paypal also started to guaranty their purchases.

It also ended up being the way that Paypal was used for other payment services because of the debit card that allowed it to prosper. I would for instance use my Paypal card to pay Billpoint or PayDirect if it was offered. This would get me 1.5% back.

StormPay and C2it are the services frauds use. Bidpay is reasonable, but never use it to pay for anything just to be paid.

The author misses Paydirect, which controls Yahoo payments. This is a decent service and is in some ways a superior "eshopping cart" service. Many small websites or discount hardware websites use Yahoo stores and the PayDirect service.

I do agree with the author that "penny payments will revolutionize the internet though" - I see the internet broadband/wifi/otherwise being free in most cases within 10 years. I see ISPs as selling "credit cards" rather than subscriptions. These cards would allow you to send and receive email and view websites. The ISPs in turn act as a bank for websites such as Slashdot. Paying them for the number of views that have crossed their service say 1/100th of a cent for every page view.

I think email should cost 1 cent to send, 1 cent to receive. I think it should be 1 penny each page/email view or bulk 1000/100MB/views for $1 -- 10,000/ MB/ views $10 -- 100,000/MB / views $50 - therefore sites that want to remain free can, sites that want to charge can almost transparently.

I think paying anything to recieve an email is an extremely bad idea, at least not without implementing some important features.

You can't forget about the spammers... eventually they'll have to pay to send their emails which of course will put a major dent into their business, but until there is no way at all that they can send bulk emails, people will not want to have to foot the bill of receiving emails they didn't want anyway.

Now, if you DO want to charge for receiving emails, charge some sort of a flat rate, scaled slightly by bulk; if you recieve thousands of emails, your rate goes up. If you recieve a couple a week, the rate is a bare minimum. This would, again thinking about spam, require that the companies charging for email access use extremely good spam blocking systems, and provide a method of allowing users to quickly and simply report spam that slips through the cracks, perhaps an address to forward to, which is randomly checked by humans in order to prevent abuse. This way, it is entirely up to the user to deal with any spam that doesn't get blocked, and if they get charged for anything they didn't want then it is entirely their fault.

So, in order for a company to charge for incoming email and not start hemorrhaging customers, they will have to both offer a quality of service significantly better than 'free' services, and also provide a means for the user to not get economically raped by unsolicited email.

just my oversized $0.02

(imagine if it did cost $0.02 to post on slashdot.. wouldn't that be ironic?)

I am part of a group that actually runs a website that charges a subscription fee for the premium content on the site. We looked at (and tested) a number of payment models.

What worked best was simply putting an inexpensive yearly fee in place. People pay once and can forget about worrying about any recurring charges or running up some kind of tab that will only come back and surprise them later.

After a year, more than half of them renew their accounts too. And just so they can have access to a giant database of humorous, strange, and twisted photos and media files. Go figure...

Disaffected youth #1: I still believe that single penny transactions will revolutionize the net.Disaffected youth #2: Are you being sarcastic, dude?Disaffected youth #1: [dejectedly] I don't even know anymore.

I know that somebody always mentions Apple in/. stories nowadays, but does anyone know how they overcame the micropayment issue with their iTunes Music Store? I would think that some lessons could be gleaned from their experience with it.

I remember reading about this system. What they do is actually pool your mico transations and charge at the end of the billing period instead of instantly charging you when you make the purchase. Apple is gambling that you'll buy enough stuff during the billing period to make the transaction fee charged to Apple palatable.

with iTMS, didn't they? Or maybe they just rely on one-click shopping to be the crack that it is, which assures the CC companies the ratio of worthwhile charges will overwhelm any expense incurred with those single 99 cent charges.

I suspect that, as with the labels, there was a sense that this was one of those "experiment with a 3% population" things, and they saw they could make money.

This is why I'm founding Micropayment Cooperative (MC). All I need is seed money to get it off the ground. If everyone sends me just $.000025, I should be able to get this up and running within a week.

Instead the HTML One-Way links, dead links, leeches, and no accountability system started. And it started ONLY because Xanadu was closed, secret system then (80's-early 90's), and HTTP/HTML was Public, known system.

AND because the people with the management's ear "rabidly prototyped" rather than designing and staying focussed on getting a product out, and pushed aside those in the project who asked them hard questions.

So they pushed the problems around from module to module rather than solving them. And

If we are going to have the concept of micro-payments, why can't we have micro-content providers?

I regularly post to Slashdot. I am essentially a micro-content provider to Slashdot. I have posted over 800 comments, many of them high Karma scorers. If I made, say, one cent per Karma point, then I would be about 30 dollars better off by now! Woohoo!

I've been thinking about adding some kind of micropayment system to my book review page.

"If you found this review useful, please click here to donate 10cent to our bandwidth bill" or something. But adding the possibility of diverting some of those cents to the person who wrote the review and some of them to the sites account, would be very, very interesting.

Today people just write the reviews because they can and for the fun of it, but nothing says "I like that" as a bit of money, even if it's

Maybe a site like Slashdot could charge "micropayments" but rebate to it's users that have high moderation. This may have an effect on eliminating troll posts and encourage well thought out responses.

I too pride myself in the high moderation I get here & substantial page views/responses I get elsewhere. I mainly use this site & other Mac Chat/Forums sites as a way to "micro-advertise" my website & my eBay auctions. I figure, if people think I s

I've started leaving the spare change when I buy little stuff like coffee, takeout food, and trinkets at small shops. Imagine what would happen to the economy if everybody left their 37 cents after buying coffe? The people working minimum-wage at the coffee shops would be making over $30/hour! I think 'micropayments' in real life (not online) could seriously revolutionize the economy, it would finally give the poorest amongst us the ability to make decent (and tax-free) earnings.

Actually, if you have ever taken an economics/political economy class or researched the issues you would find that liquidity is a very important factor in a strong economy. The more money moves around the more people make, and the better the economy does. If you give $1000 to a rich person it is likely that they will take that money and invest it in something, because they are not living between paychecks. People who have discresionary income tend to invest "found money" more than people who have none.

Heh, it would take all of about 5 seconds before stores started abusing the hell out of that--instead of everything costing $x.99 ("oooh look it's _under_ x+1 dollars!"), everything would start costing $n.01, or more likely be priced in such a way that it comes out to $n.01 with sales tax.

Even if businesses did get more money from this (which assumes that consumers currently send all their change to/dev/null instead of finding a use for it), it's overly optimistic to assume that the extra profits would be

1) They debuted at the height of the dotcom craze, when advertising money, venture capital, and ludicrous business plans were everywhere. Back then, users were getting so much of their online experience subsidized by these factors that micropayments weren't attractive to them. Now, in the depressed post-boom environment, micropayments are becoming attractive to consumers again.

2) Most micropayment companies focused on the wrong markets. Micropayment companies have traditionally focused on large content providers, trying to get already successful businesses to change their business model to something their consumers were skeptical or even resentful of. BitPass, however, has instead focused on a bottom-up approach, marketing to individual content producers like webcomics creators, artists, and musicians, who haven't been able to charge what their work was worth until now. I think this is going to be the deciding factor in their success.

I'm working on a BitPass user group site to help the BitPass community grow. If you're curious, I'll post to my journal [slashdot.org] when the site is up.

I've been saying it for years, and I continue to be right. Micropayments don't solve a customer problem, they solve a provider problem. If you don't solve a customer problem, you don't have a success. Nobody wants to be nickle and dimed to death on the net. It's time to retire this monumentally dumb idea.

The amount of time, effort and money poured down this rathole is really sad.

And the answer is, they will *never* happen. read all about it [openp2p.com] here. In that article, Clay says so much, so perfectly, that I won't quote any of it--just go and read the whole thing. OK, I can't resist. One of his points is micropayments have too much "user overhead"--you have to make a descision for literally every penny you spend, and that alone makes it not worth it. As he says, the user is getting conflicting messages: "This is worth so much you have to decide whether to buy it or not" and "This is worth so little that it has virtually no cost to you."

The big problem with Shirky's analysis is that he makes no distinction between payments of, say, half a cent, and payments of a dollar or more. And that's a major flaw in his argument.

In the real world, Shirky's argument translates to: "No one will buy a candy bar for 50 cents because they will be paralyzed by the user overhead." And, of course, we know this wrong. The candy industry (just to give an example) makes millions of dollars of profit a year selling 50 cent candy bars.

Likewise, there is a legitimate zone of value for digital content that falls between a dime and a couple bucks. 50 cents for an online comic you like, or for a song from a band you want to support, isn't any different than 50 cents for a candy bar.

Micropayments are just payments. And I think it'll be funny if, in a couple years, the artists and writers and bands who are making money off of micropayments can read Clay's article and have a good laugh.

He doesn't make the distinction because payments of a dollar or more are not, by definition, micropayments. The term "micropayments" desccribes payments in the $.01 to $.10 range. And $.50 candy bars are successful because there is not a $.25 transaction fee imposed by the banking companies on each and every bar sold.

Micropayments require substantial data infrastructure. Think of the electricity in your house. It might cost, say, $.01 to have one light bulb on in your house for 10 minutes. So that's a mi

Even the non-web-literate realize that using Internet-based micropayments will leave a trail of every transaction they conduct stored on the net, waiting to be vacuumed up by marketers, identity thieves, and Total Information Awareness / CAPS II. Doubleplusungood.

Banks control financial transactions in the western economy, and with banks charging $1 - $3 for ATM transactions (and similar outrageous fees for services that were once considered part of the package of using a ba

Ugh. Micropayments were a bad idea back in the dot-com days where they were concieved, and they're still a bad idea today. People won't visit sites where they are going to be (literally) nickel-and-dimed to death. People don't want yet another financial account to keep track of, yet another critical login to remember.

Even if one of these schemes manages to attract an appreciable following, large enough to be noticed by the credit card companies, then what? All it would take is a simple policy change to put them out of business. Maybe $50 gets unlimited sub-$5.00 transactions per month, or something like that. The whole micropayment concept is necessitated by the desire to avoid high transaction fees on credit card payments. Once the credit card companies wake up and provide a plan tailored for the smaller retailer, the entire micropayment industry disappers. Perhaps it will take a micropayment company that looks like it is on the verge of real success to do it, but as soon as they attract the attention of the big boys, they will be wiped out, pretty much overnight.

Any business that can be invalidated by a policy change by a larger, competing institution is not, in the long term, viable.

If people have to take deliberate action to spend a penny, it's not going to work; at $7.20/hour, if it takes them five seconds to read and respond to a prompt, they've spent more in their time than the penny they're paying.

However, if the payments are made automatic, a different problem takes over: People aren't culturally ready for having their money spent, by a computer, on their behalf. Never mind that every time their thermostat turns on, it's spending their money -- that's sufficiently hidden from the users.

The only way I can see micropayments becoming mainstream is if they are refundable within a given time limit -- but that would only work if people don't start "charging back" all their payments.

I hereby declare the following idea mine: what if you just charged micropayments, and it worked? Suppose that it costs 3 cents to process a 1 cent transaction, but if you're doing 80 billion transactions a month, you don't care because:1) one day, people will find a way to make it profitable, and2) when that day comes, you'll already own the market & make back everything you lost.Just do business & wait for technology to catch up. There's too much fussing about whether or not it would be profitable from the get-go.

Micro-payments are alive and well and operating on mobile phone networks the world over. Next generation mobile phones will link directly to your PC, thus providing an idea micropayment structure via a "known" organisation (rather than people like PayPal).

I know people use paypal for tip jars and stuff, but paypal is *not* micropayments! paypal is a system where anyone can use a credit card to send money to anyone else, with neither side having a merchant account. *that* is the problem paypal solves. paypal does *not* make it easier to pay $.01 or $.03 for a web page. (they are still driven by banks who charge a minimum of $.10 to $30 per transaction, AFAIK.) The reason we will never, ever, ever see true micropayment systems is because the human brain does not want them [openp2p.com]. Here's a bit from that article:

Imagine you are moving and need to buy cardboard boxes. Now you could go and measure the height, width, and depth of every object in your house - every book, every fork, every shoe - and then create 3D models of how these objects could be most densely packed into cardboard boxes, and only then buy the actual boxes. This would allow you to use the minimum number of boxes.

But you don't care about cardboard boxes, you care about moving, so spending time and effort to calculate the exact number of boxes conserves boxes but wastes time. Furthermore, you know that having one box too many is not nearly as bad as having one box too few, so you will be willing to guess how many boxes you will need, and then pad the number.

For low-cost items, in other words, you are willing to overpay for cheap resources, in order to have a system that maximizes other, more important, preferences. Micropayment systems, by contrast, typically treat cheap resources (content, cycles, disk) as precious commodities, while treating the user's time as if were so abundant as to be free.

Why does it matter that users hate micropayments? Because users are the ones with the money, and micropayments do not take user preferences into account. [...]

To summarize, when the cost of clicking a link is only time (how long will it take to load that link on my 28.8 modem), its a relatively simple decision. When its both time and money, a judgement has to be made. Sure, for a penny a page, one might not worry about it, but nobody's going to make money on a penny a page, no matter what "they" say; that only works on click-rates the size of CNN, MSNBC, Slashdot, source-forge, etc. And even then, when they see "the bill", it'll be like getting their first credit card bill and having no idea just how much they "spent" online...then they'll be reconsidering each and every link and users don't want to do that.

Users surf or they don't. If you had to pay a per-minute charge for doing real surfing in the pacific ocean, you wouldn't surf, so (extending the metaphore) why would you do it at home? There's a reason AOL and all the other ISPs got rid of their traditional per-minute charges and people buy cell phone and long-distance plans with max minutes instead of per-minute charging; the variable at the end of the month isn't worth the hassle.

Yeah, micropayments sound great to content providers. "Everyone will pay me for only what they use and all of what they use!" But it sounds awful to users.

Let's look at some real-world examples:

Take-a-penny trays

All-you-can-eat buffets

Free refills on non-alcholic drinks everywhere

6 packs, 12 packs, 24 packs (you don't just buy only as many bottles/cans as you want)

Unlimited local calls on home phones

600-minute & 1200-minute cell phone plans

Maybe these aren't all completely relevant, but I just don't see paying a little bit for each click being of value to consumers. I see it as being a huge pain in the rear, even if it is all automated and trusted. (cough, Paypal, cough)

I think the real problem is that much of the internet's content just isn't worth any money to us. We can get a lot of content for 50 cents per day from the local newspaper. We can get content faster from TV at no incremental cost (but arguably less convenience). The internet can be great, but I ain't paying for Slashdot. The Motley Fool already lost me when they went subscription; they just aren't worth it.

If most everything interesting went pay I think there would be enough people volunteering news/info sites and discussion boards that we could still get our free internet. We may have to move to a p2p distribution model since running a centralized site as busy as Slashdot, for example, costs a pretty penny in bandwidth.

E-gold [e-gold.com] works wonders. Pay any weight of gold, silver, platinum or palladium, all backed in real life by metal. You own the real metal and a payment is just a transfer of ownership. You don't even have to pay by weight, you can say $100USD worth of e-gold.

Been running for years, working really well, the only thing is the slow adoption rate and the fees. When (or if) this reaches critical mass it will be the best of all the options.

This is how i pay for my hosting and brought my domain name, not no mention a few other things.

Just because something is possible, doesn't mean that it makes any sense to do it. Flooz and Beenz couldn't give away their fake currency. Nobody wants micropayments.

The only people crying for micropayments are websites that produce "content" that's nearly worthless. If the content is worth something, people will make macropayments to subscribe. If the content is essentially worthless, consumers are not going to push to be charged an amount so small that they don't notice it until the end of the month, an

Micropayments are often discussed from technical and commercial viewpoints, without considering social aspects.

The world's biggest information providers are, by and large, in first world countries with strong currencies. The most needy (as opposed to the biggest) consumers of this information are in third world countries with weak currencies.

Micropayments stand to put huge amounts of information beyond the reach of those who need it in the process of improving society, and quite often the content provi

The New York State EZ-Pass toll transponder system, and probably many others, may not be a "micropayment" system but certainly occupies some kind of middle ground. They initially bill your credit card $15, which establishes $15 in your EZ-Pass account. Toll payments of $0.65, $1.15, etc. gradually reduce the amount; when the amount gets low, they hit your credit card automatically for another $15 "recharge."

So perhaps one of the things that's happening with micropayments is that these "credit card auto-recharge" accounts are serving some of the functions for which micropayments would otherwise be needed.

I'm not quite sure what happens when you terminate your EZ-Pass account; I assume they send you a check for $6.22 or whatever. I suppose that if I had thirty or forty of these accounts, it might get to be annoying having $500 or $1000 tied up in tiny, non-interest bearing, spendable-for-only-a-single-purpose accounts.

As far as I'm concerned, anything that ends with a Z when it should end with an S deserves to die a painful death. I hate that cute "we pretend we can't spell" crap. It's like the "Kiddie Korner" daycares. That shit is so farking annoying. It's right up there with "My (wtf-ever)." I don't want to do business with "My Simon" and I dont want to tell my dad to look in His My Documents for a file. I don't want to use "My Yahoo," I want to use everone else's. Am I the only one that hates the "cute-ing up"

micropayments aren't going to fly, unless there's a cross-vendor api that allows me to choose my own micropayment gateway and not be limited to only -their- micropayment customers. and that isn't likely unless the treasury gets involved. (you can give me a call at my mars cottage when they get around to that)

what content sites -should- do instead, is let people charge up a site-specific 'meter', with say, $5. and as they view content, you deduct micropayments from the script total. when they hit 0, you either bring the ads back for that user or prompt em for more dough.

alternately, sites could just use the street performer protocol. seems to work just fine for every worthy webcomic to date. if not enough people buy t-shirts and prints and collectibles, you close up shop and go somewhere else, or try again (perhaps in a different format).

no need for pvp or penny-arcade or homestarrunner to go to micropayments. sites less dedicated to merchandising can stick with metered subscriptions. everyone wins. (except the micropayment banks)

When you contest payment with your bank, what happens? Well, you talk to an actual live human being, who will do actual human things, and make a decision on whether to refund you the money and whether to prosecute a third party. And your transaction fees pay his salary.

What happens when you contest something with PayPal? You drop them an email (good luck trying to talk to anyone), and then they freeze your account [paypalsuit.com], sieze (i.e. spend) your money, and (if they're feeling particularly communicative) tell you to go screw yourself. They do that not because they're evil (although they probably are) but because they simply don't make enough margin on their transactions to be able to afford to investigate them, and because they know that it's not worth anyone's time to sue them, even in small claims court, for the contested amounts.

Now, when the transaction value drops to 1 cent, what's the best case margin on that? You've got purchase and maintenance costs on your servers and database, plus bandwidth costs for those 128bit SSL encrypted transaction details that fly both ways. Half a cent? More if you handle a lot. A loss if you don't handle enough to amortize your setup costs.

Now, how many fraudulent transactions do you have to have - from a single source - before it's worth taking any action? It costs ten cents for a staffer to click on a button, so you're talking twenty transactions. If the staffer has to think at all, it's a hundred. If they have to do any investigatation at all - for example, to decide if a bunch of transactions are from a single source - it's thousands. If you want to hand it over to a lawyer or other third party, it's tens or hundreds of thousands.

But that's fantasy land, because it's not worth even recording the details of the transaction that would allow you to decide if it was fraudulent or not. The logs themslves would take a huge chunk out of your profit. You'd simply have to trust the referrer.

But if it's not worth your while even retaining transaction records for micropayments, or to investigate fraud after the fact, how are you going to protect themselves from fraud?

I suspect that you're not. It comes down to the equation of whether it's worth anyone's time to crack the system. Well, as thousands of open source projects, white hat hobbyist hackers, and karma systems show, lots of people don't put a dollar value on their time. And given that the chances of being caught are minimal, well, why not give it a go? After all, it's only avoiding a penny a time. Who can that hurt?

Any popular micropayment system will (I suggest) be defrauded, and the costs will come right out of the payment backer's pocket. We've seen how PayPal deals with that; ignore it. Don't answer the 'phones. Freeze the account, and spend the money in it. With micropayments, who's going to even bother complaining? And if they do, how much are they going to have in their account? $5? It's barely even worthwhile seizing that, and not worthwhile at all if you have to send or even read a letter.

There is simply no compelling reason for anyone to manage micropayments, other than as a tool of desperation to prop up a flagging or non-existent business model (*cough* slashdot *cough*). There's precious little profit to be made from it, and a lot of opportunity to be scammed so badly that you won't even realise that you're bankrupt until you total the figures at the end of the year and find out that most of your payments came from Mr M. Mouse.

I suspect that it's good old fashioned economics that are stopping any of the big financial institutions from implementing mi

Maybe I am just a cheap bastard, but fractions-of-a-penny are critical for me to 'buy into' quite a lot of systems. Maybe, instead of talking about US 'pennies', we should set up the system's base unit as Turkish Liras! (Visit Turkey, change small amount of Dollars/Euros, become an instant millionaire! Woo Hoo!)